PROVIDENCE – The R.I. Office of the Health Insurance Commissioner found that its affordability standards have been effective in setting public priorities for commercial health insurers.

The standards have helped improve system affordability, monitor the insurers' progress and “hold them accountable for this important work,” it said in an 18-page report.

Overall, the three commercial insurers – Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England, and Tufts Health Plan of Rhode Island – were found to be in basic compliance in a process described as “ongoing.”

The report, released on Dec. 14, provides an evaluation of how commercial insurers in Rhode Island are complying to date with the four affordability standards mandated by R.I. Health Insurance Commissioner Christopher F. Koller in July 2010. The standards include:

Expanding and improving the primary care infrastructure in the state - with limitations on ability to pass on in premiums.

Spreading the adoption of the chronic care model-style medical home.

Standardizing Electronic Medical Record incentives.

Working toward comprehensive payment reform across the delivery system.

“Affordability Standards are being implemented and are changing the nature of health insurers and provider contracting. This is a significant accomplishment,” the report said. “It is still too early to assess their ultimate effectiveness in changing medical expense trends.”

The report said that during the past five years, the number of people with commercial health insurance in Rhode Island has declined by 50,000, or about 10 percent, while the number of uninsured Rhode Islanders has grown by roughly the same amount.

Further, the report found that one of the drivers in the decline in enrollment had been the rate of increase in commercial health insurance premiums. Commercial medical expense trends have rise by 9 percent in the last three years, while overall inflation rates have hovered between 1 and 2 percent, the report said.

“Although not directly regulated under OHIC’s statute, hospitals in turn are clearly influenced by the actions of health insurers and the actions of OHIC – which is charged with ensuring the fair treatment of providers,” the report said.

Given their status as large community assets with significant local, statewide and community roles, the report continued, “OHIC believes it critical [that] policy makers work with hospitals in policy discussions regarding how medical care systems in Rhode Island can best be organized and paid to meet the needs of all Rhode Islanders. An essential part of these discussions will be how health insurers contract with hospitals in the future.”

One of the stumbling blocks in being able to assess the outcomes of payment reform across the health delivery system has been to what degree contracts between hospitals and commercial insurers are public documents.

“OHIC believes its access to contractual information is not at question, but how that information is summarized for public use is an ongoing conversation,” the report said. “Traditionally, insurers and hospitals alike have viewed this information as proprietary and confidential, even as many parties have expressed concern about the fairness of those negotiations. OHIC believes there is a strong public interest in holding insurers and providers accountable for their business arrangements – particularly in the case of hospitals, where Medicaid and Medicare determine 50 percent of their revenues in a very public - if complex - fashion.

In the report, health insurance affordability and its relationship to transparency in contracts between hospitals and insurers was highlighted in the chart that showed the disparity in the ways that hospitals were reimbursed by commercial insurers indexed to Medicare payments in Rhode Island in 2009. The disparity, the report said, raised questions regarding how could some hospitals remain financially viable on much smaller payments from carriers, and how such payments were negotiated.”

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